Inequality Rising

Thursday, 25 June, 2015

Anyone reading a paper or tuning into the news this week will have been hard pressed to miss the stories on child poverty. With new figures out this week numerous organisations and commentators had predicted a large rise in the figure. In reality child poverty has remained flat over the past year.

With 2.3 million children living in poverty, we can hardly call this a success. Any child living in poverty is a child we have failed. But there was another figure found in the DWP’s release of equal significance but that has been largely ignored in the run-up. The Gini coefficient, one of the more prominent measures of inequality, found that inequality increased between 2012/13 and 2013/14. In 2012/13 the Gini coefficient was at a level of 33.6% (a level similar to 1990). In 2013/14 this had increased to 34.2% (a similar level to 1991). This isn't the only bad news, the figures released today also point to certain specific groups increasingly suffering (the highest number of people in disabled households in poverty since 1998) whilst other groups, like the richest 10%, have seen their income share increase.

The increased Gini level is not dramatic, in fact it is statistically insignificant, but what it clearly represents is an abject failure of government to tackle the UK’s dramatically high inequality. What’s worse is that some mooted policy proposals could well increase inequality further.

Strong growth in employment has helped prevent poverty and inequality from increasing at a faster rate, and follows the trends shown in a recent review of social security caseloads in the UK. There has been a falling number of people reliant on out of work social security, a notable success, but part of the reason for that success has been strong levels of in-work support in the form of tax credits. Proposals to cut away at these tax credits may well result in those on lower incomes losing out and a subsequent increase in inequality.

The UK is now one of the most unequal countries in the developed world and is substantially less equal than it was 40 years ago. We know this matters because those in less equal countries like ours are more likely to have a poor education, suffer from mental or physical ill health and even die earlier.

We cannot expect to provide a fairer society when we cut away at the incomes of the poorest workers. If we really want Britain to be a country where everyone has a fair chance we need to drastically reduce the gap between the rich and the rest of us.